191.03 IMPOSITION OF TAX.

   (a)   Rate and Income Taxable. An annual tax for the purpose specified in Section 191.01 shall be imposed on and after June 1, 1990, at the rate of two percent (2%) per annum upon the following:

      (1)   On all qualifying wages, commissions and other compensation earned or received by residents of the City;

      (2)   On all, qualifying wages, commissions and other compensation earned or received by nonresidents for work done, or services performed or rendered, in the City;

      (3)   A deduction against qualifying wages will be allowed for properly reported and documented Employee Business Expenses, included on Form 2106, but shall be limited to the amount actually deducted for federal income tax purposes. Any deduction against qualifying wages for income subject to tax by another taxing municipality will reduce any credit for tax withheld or paid accordingly.

      (4)   On all income derived, which require reporting on IRS Form W- 2G, Form 5754 and/or any other form required by the Internal Revenue Service, from prizes, awards, gaming, wagering, lotteries, gambling, or schemes of chance by a resident, and on all income derived from prizes, awards, gaming, wagering, lotteries, gambling, or schemes of chance by a non-resident when such income is won or received from sources within the City.

      (5)   On covenants not to compete to the extent includible on the taxpayer's federal return.

      (6)   On guardian, executor, conservator, trustee, or administrator fees earned or received by a taxpayer.

      (7)   On the portion attributable to the City of the net profits earned and accrued or received of all resident associations, unincorporated businesses, pass-through entities, professions or other entities, derived from sales made, work done, services performed or rendered, and business or other activities conducted in the City. On the portion of the distributive share of the net profits earned by a resident owner of a resident unincorporated business entity or pass-through entity not attributable to the City and not levied against such unincorporated business entity or pass-through entity.

      (8)   On the portion of the distributive share of the net profits earned and accrued or received of a resident partner or owner of a resident unincorporated business, pass-through entities, entity not attributable to the City upon which the tax was not paid by the entity. On the proportion of the distributive share of the net profits earned by a resident partner or owner of a resident unincorporated business entity or pass-through entity not attributable to the City and no levied against such unincorporated business entity or pass-through entity.

      (9)   On the portion attributable to the City of the net profits earned and accrued or received of all nonresident associations, unincorporated businesses, pass-through entities, professions or other entities, derived from work done or services performed or rendered and business or other activities conducted in the City, whether or not such association or other unincorporated business entity has an office or place of business in the City. On the portion of the distributive share of the net profits earned by a resident owner of a nonresident unincorporated business entity or pass-through entity not attributable to the City and not levied against such unincorporated business entity.

      (10)   On the portion of the distributive share of the net profits earned and accrued or received during the effective period of this chapter of a resident partner or owner of a non-resident association or other incorporated business entity, not attributable to the City, on which the tax was not paid by the entity.

      (11)   On the portion attributable to the City of the net profits earned and accrued or received of all corporations derived from sales made, work done, services performed or rendered and business or other activities conducted in the City, whether or not such corporations have an office or place of business in the City.

   (b)   For the purpose of this section, the taxable base shall be determined in accordance with the Federal tax interpretations, when applicable, and with the accounting method used by the taxpayer for Federal income taxes, adjusted to the requirements of this chapter.

   (c)   Businesses both In and Outside the City Boundaries.

      (1)   The portion of the net profits attributable to the City of a taxpayer conducting a business, profession or other activity both within and without the boundaries of the City shall be determined as provided in Ohio Revised Code 718.02 and in accordance with the rules and regulations adopted by the Commissioner of Taxation pursuant to this chapter.

   (d)   Consolidated Returns.

      (1)   Filing of consolidated returns may be permitted or required in accordance with rules and regulations prescribed by the Commissioner of Taxation. The City shall accept for filing a consolidated income tax return from any affiliated group of corporations subject to the City's income tax if that affiliated group filed for the same tax reporting period a consolidated return for federal income tax purposes pursuant to section 1501 of the Internal Revenue Code. A consolidated return must include all companies that are so affiliated.

      (2)   For allocation of income and deductions between related taxpayers in the case of a corporation that carries on transactions with its stockholders or with other corporations related by stock ownership, interlocking directorates or some other method, or in case any person operates a division, branch, factory, office, laboratory or activity within the City constituting a portion only of its total business, the Commissioner of Taxation shall require such additional information as he may deem necessary to ascertain whether net profits are properly allocated to the City. If the Commissioner of Taxation finds net profits are not properly allocated to the City by reason of transactions with stockholders or with other corporations related by stock ownership, interlocking directorates, or transactions with such division, branch, factory, office, laboratory or activity or by some other methods, he shall make such allocation as he deems appropriate to produce a fair and proper allocation of net profits to the City.

   (e)   Operating Loss Carry-Forward. 

      (1)   The portion of a net operating loss, based on income taxable under the Ordinance, sustained in the taxable year beginning after December 31, 2001, allocable to the City of Hamilton may be applied against the portion of succeeding years allocable to the City of Hamilton, until exhausted, but in no event for more than three (3) years immediately following the year in which the loss was sustained. No portion of a net operating loss shall be carried back against the net profits of any prior year.

      (2)   The portion of a net operating loss sustained shall be allocated to the City in the same manner as provided herein for allocating net profits to the City.

      (3)   The Commissioner of Taxation shall provide by rules and regulations the manner in which such net operating loss carry-forward shall be determined.

      (4)   Losses from federal schedules and other sources reported for federal income tax purposes cannot be used to offset qualifying wages, commissions, other compensation and other taxable income earned and received by residents or non-residents of the City, but may be carried forward as provided in subsection (d)(2). However, if a taxpayer is engaged in two or more taxable business activities to be included in the same return, the net loss of one unincorporated business activity (except any portion of a loss reportable for municipal income tax purposes to another tax entity) may be used to offset the profits of another for purposes of arriving at overall net profits.

   (f)   Exclusions. The provisions of this chapter shall not be construed as levying a tax upon the following:

      (1)   Proceeds from welfare benefits, unemployment insurance benefits, social security benefits, and qualified retirement plans as defined by the Internal Revenue Service

      (2)   Proceeds of insurance, annuities, workers' compensation insurance, permanent disability benefits, compensation for damages for personal injury and like reimbursements, not including damages for loss of profits and wages.

      (3)   Dues, contributions and similar payments received by charitable, religious, educational organizations, or labor unions, trade or professional associations, lodges and similar organizations.

      (4)   Gains from involuntary conversion, cancellation of indebtedness, interest on federal obligations and income of a decedent's estate during the period of administration (except such income from the operation of a business).

      (5)   Alimony received.

      (6)   Compensation for damage to property by way of insurance or otherwise.

      (7)   Interest and dividends from intangible property.

      (8)   Military pay and allowances received as a member of the armed forces of the United States and of members of their reserve components, including the Ohio National Guard.

       (9)   Income of any charitable, educational, fraternal or other type of nonprofit association or organization enumerated in Ohio Revised Code 718.01 to the extent that such income is derived from tax-exempt real estate, tax-exempt tangible or intangible property, or tax-exempt activities.

      (10)   Any association or organization falling in the category listed in the preceding paragraph receiving income from non-exempt real estate, tangible or intangible personal property, or business activities of a type ordinarily conducted for profit by taxpayers operating for profit shall not be excluded hereunder.

      (11)   In the event any association or organization receives taxable income as provided in the preceding paragraph from real or personal property ownership or income producing business located both within and without the corporate limits of the City, it shall calculate its income allocable to the City under the method or methods provided above.

      (12)   If exempt for federal income tax purposes, fellowship and scholarship grants are excluded from City income tax.

      (13)   The rental value of a home furnished to a minister of the gospel as part of his compensation, or the rental allowance paid to a minister of the gospel as part of his compensation to the extent used by him to rent or provide a home pursuant to section 107 of the Internal Revenue Code.

      (14)   Compensation paid under section 3501.28 or 3501.36 of the Ohio Revised Code to a person serving as a precinct official, to the extent that such compensation does not exceed one thousand dollars ($1,000) annually. Such compensation in excess of one thousand dollars may be subjected to taxation. The payer of such compensation is not required to withhold Hamilton tax from that compensation.

      (15)   Compensation paid to an employee of a transit authority, regional transit authority, or a regional transit commission created under Chapter 306 of the Ohio Revised Code for operating a transit bus or other motor vehicle for the authority or commission in or through Hamilton, unless the bus or vehicle is operated on a regularly scheduled route, the operator is subject to such tax by reason of residence or domicile in Hamilton, or the headquarters of the authority or commission is located within Hamilton.

      (16)   The City shall not tax the compensation paid to a nonresident individual for personal services performed by the individual in the City of Hamilton on twelve (12) or fewer days in a calendar year unless one of the following applies:

         (A)   The individual is an employee of another person, the principal place of business of the individual's employer is located in another city in Ohio that imposes a tax applying to compensation paid to the individual for services paid on those days; and the individual is not liable to that other city for tax on the compensation paid for such services.

         (B)   The individual is a professional entertainer or professional athlete, the promoter of a professional entertainment or sports event, or an employee of such promoter, all as may be reasonably defined by the City of Hamilton.

            (i)   For purposes of this Section, "day" means any part of a 24 hour calendar day where compensation is earned in the City.

            (ii)   Beginning with the thirteenth (13th) day, whether consecutive or non consecutive, the individual shall be taxable on all income subject to the tax as outlined in this Section during the first twelve (12) days, whether consecutive or nonconsecutive.

      (17)   The income of a public utility when that public utility is subject to the tax levied under section 5727.24 or 5727.30 of the Ohio Revised Code, except starting January 1, 2002, the income of an electric company or combined company, as defined in section 5727.01 of the Ohio Revised Code, may be taxed by the City subject to Chapter 5745 of the Ohio Revised Code:

         (A)   The income of an electric company or combined company;

         (B)   The income of a telephone company.

As used in division (e)(17) of this section, "combined company", "electric company" and "telephone company" have the same meanings as in section 5727.01 of the Ohio Revised Code.

      (18)   An S corporation shareholder's distributive share of net profits or losses of the S corporation.

        (19)   Generally the above noted items in this section are the only forms of income not subject to the tax. Any other income, benefits, or other forms of compensation shall be taxable.

         (Ord. 2015-11-101. Passed 11-18-15.)